Friday, February 8, 2013

Transport Finance without the Feds: The Canadian Model

Transport planning and policy in the United States is dominated
by the federal gas tax. Currently 18.6 cents per gallon of gas and 24.6 cents
per gallon of diesel, federal gas taxes are used to guide preferred transport
investment across the country. For the past forty or so years, the federal gas
tax has, in the words of Lisa Schweitzer, been buying everyone’s lunch. Yet all
is not well. The federal gas tax hasn’t increased in 20 years, reducing the
absolute and relative buying power of the revenue. Increased federal
regulations and interest groups limit what the gas tax can be used for, and a
steady stream of other people’s money (federal dollars) creates incentives to
spend on transport projects that offer few benefits. At an extreme,
transportation projects are developed and financed by federal monies withouteven bothering to claim any transportation benefits.

The declining share of federal money for transport finance has
many people worried that transportation policy and finance will devolve to the
states. Such devolution of authority is viewed as a necessarily lousy outcome,
especially by progressives. (Richard Florida even wants a cabinet position for a Department of Cities. We didn't get urban renewal right the first time, so
let’s try again, but with even more authority.) From my perspective, the status
quo for transport policy and finance cannot be objectively defended as a
success. Looking at the period of about 1971 (the year Amtrak was formed is a
good marker of the beginning of the current era of federal policy, but just
about any year between 1964-1974 works) to present US transport systems
declined in nearly all measures of productivity, economic performance, socialwelfare, or just about anything else you care to measure. For whatever occasional
successes US policy has had, the nation has received an extremely poor return
on investments made. We can do better.

An experiment devolving transport policy and finance to the states
is likely to improve overall performance of all aspects of transport. For evidence
we can look to out chilly northern neighbors in Canada, which does not have
anything equivalent to the U.S. Department of Transportation. Transport policy
is the responsibility of the provinces, and transit policy is the
responsibility of the cities. So how do Canadian cities compare?

Last week a new report on Toronto area transport finance was
published that explains the financing structures in place there and potential
future monies. Here is a link to the report. The authors promote many taxes and
fees, all of which are economically sound and focus on raising money for
transport by charging those who benefit from a well-functioning transport
system. Essentially, if the Greater Toronto Hamilton Area needs new transport investment
to maintain and improve economic competitiveness then they can and should raise
the money locally.

TransLink is the multi-modal
transportation organization for Greater Vancouver, BC, and it is unlike what we
see in the States. It is in fact, closer to the idea described inEnterprising Roads,
a transportation utility with autonomy constrained by oversight.One
of the key points to consider is that metropolitan Vancouver has a transit mode
share of 21%, comparable
with much larger Toronto and Montreal (though behind metro New York's 30%, it
is well ahead of Seattle's 9%), despite ranking34thin population. Some of that has to do
with institutional factors and governance.

In addition to service innovation and the ambitious expansion plans in Toronto, British Columbia instituted a carbon tax a few years ago, though this may not survive a scheduled vote in May. There are certainly problems with the decentralized system. Some Canadians want a national transit agency. Fragmented governance in regions makes coordination difficult, and perhaps a stronger regional agency is needed. Most difficult, perhaps, is that many cities forego transit service all together.* However, eliminating unproductive transit so that resources can be used elsewhere is actually good policy. But by nearly every measure Canadian transport policy outcomes are superior to US outcomes. Whether US transport finance and policy devolves to the states remains to be seen, but it certainly isn’t something that should be dismissed as inferior to what we have now. It may well be better.

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*This sentence was removed as it is incorrect (I had bad info on this case, but the larger point remains):"The city of Guelph, for instance, has 120,000 people but no bus service. "

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About Me

David King is an Assistant Professor of Urban Planning.His research explores the impact of local
transportation planning on the built environment, public finance, social equity
and accessibility.As part of this
research he has written about the phenomenon of cruising for parking and used
spatial regression techniques to analyze travel behavior.He also studies how public policy influences
the adoption of new technologies to address congestion, energy and
environmental concerns.These issues are
the focus of Professor King’s teaching through his courses covering planning
techniques and methods, transportation and land use planning and transport
policy.